Marijuana businesses have gotten their answer from the banks and they have refused business with legal pot shops. Late last year, legal marijuana businesses anxiously waited for a “yellow light” approval from the U.S. Department of Justice and the Treasury that would grant legal pot shops basic banking rights, but the banks made the decision before the “yellow light.”

Since banks have said no, legal marijuana businesses cannot have basic banking rights like obtaining credit lines, loans, or even bank accounts. Even local banks have been denying legal marijuana businesses.

Despite marijuana’s legalization of recreational use in Colorado and Washington, and decriminalization in dozens more states, the Controlled Substances Act of 1970 still has cannabis listed as a Schedule I narcotic, meaning it’s classified as most harmful with no medical use. Cocaine is a Schedule II drug, meaning it’s classified as having limited medical advantages, even though it’s a more damaging substance.

Marijuana’s drug scheduling has banks nervous about working with legal marijuana businesses. Banks fear backlash, like massive fines and punishment for perceived instances of money laundering, from federal regulators and law enforcement if they conducted business with legal pot shops.

In the first five days that marijuana was legal in Colorado, state marijuana businesses sold more than $5 million worth of marijuana. Last year, legal marijuana topped $1.5 billion in sales. Sales for 2014 are expected to almost double with estimates from $2.34 billion to $3 billion.  

“Banking is the most urgent issue facing the legal cannabis industry today,” said Aaron Smith, executive director of the National Cannabis Industry Association in Washington, D.C. “So much money floating around outside the banking system is not safe, and it is not in anyone’s interest. Federal law needs to be harmonized with state laws.”

Legal marijuana remains a mostly cash-only industry, and the fact has created inconvenience and fear among marijuana business and dispensary owners.

Those entrepreneurs have complained about the inconvenience of having to account for and report such large amounts of cash to the government. They have to physically carry tens of thousands of dollars to Department of Revenue branches in order for the government to tax the money. And shop owners remain in constant fear of being targeted by criminals who may want to rob the owners.  

Ironically, the banks’ decision to not do business with marijuana businesses only creates a potential to breed criminal activity, which is exactly what they are wanting to avoid. There is only more opportunity for crime to happen. Along with high risks for robbery, there is a higher chance of white-collar-type crimes.

“Anytime you do this much business in cash, it’s a target for crime — and it’s pretty apparent that’s been going on here over the last couple of years,” said Denver auditor spokesman Denis Berckfeldt. “And you can’t account for this money. How much have you sold? Are you paying the taxes you’re supposed to be paying? How much is hidden?”

Owners are forced to be completely silent with banks about the source of income when they shouldn’t have to be. Colorado lawmakers have begun pleading with the federal government to grant legal marijuana businesses with banking rights. Allowing pot shops access to banks will prove beneficial for regulatory and tax purposes, Colorado lawmakers said.  

The situation creates a headache for businesses that are trying to legitimize themselves as they can’t readily have their money taxed and placed in the greater flow of America’s legal money. Marijuana businesses have even resorted to paying their employees with sealed envelopes of cash.

Josh is a writer and researcher with Ring of Fire. Follow him on Twitter @dnJdeli.